UBS Remains Sidelined on lululemon athletica (LULU) Following In-Line 2Q

UBS reiterated a Neutral rating and $72.00 price target on Lululemon Athletica Inc. (NASDAQ: LULU) following the company's 2Q earnings report. LULU reported EPS of $0.38, in-line with the Street's $0.38.

Analyst Michael Binetti commented, "With LULU up nearly 45% YTD (vs XRT +2%), we expect shares to be down on 2Q SSS decelerating to 5% (from 8% in 1Q), which was slightly below our +5.5% expectations but well-below buy-side expectations. This deceleration comes ahead of more difficult SSS compares (3Q15 +9%; 4Q15 +11%) as LULU anniversaries LY's pant wall re-launch (its biggest category at ~37% of sales). While LULU is confident in its product pipeline, traffic headwinds have continued into early 3Q from 1H and if women's bottoms slow (from +DD to +M-HSD levels), this will put incremental pressure on women's tops (~33% of sales) to perform (lapping 3Q15's +27%) and overall SSS upside could be harder to achieve. Maintain our Neutral Rating and $72 PT."

For an analyst ratings summary and ratings history on Lululemon Athletica Inc. click here. For more ratings news on Lululemon Athletica Inc. click here.

Shares of Lululemon Athletica Inc. closed at $76.66 yesterday.

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